INTEREST ON DAMAGES AND COSTS THAT HAVE TO BE REPAID FOLLOWING AN APPEAL: WHAT IS THE APPROPRIATE RATE?
Losing a case on appeal is always painful. Having to repay the damages and costs that have been received is more painful still. Another element of pain is the fact that the losing party has to pay interest on the sums that they have held. Here we look at a judgment where the issue of interest was considered in the context of personal injury case.
“Multiplex Construction provides a clear precedent for applying base rate plus 1% in similar circumstances concerning the return of monies paid under a court order that was later reversed.”
KEY PRACTICE POINT
Clients must be told of the risk that they may have to repay damages if the defendant is appealing. They must also be told of the potential liability to pay interest. The lawyers involved must also be aware that any costs ordered will also be repaid – together with interest.
PAUSE FOR THOUGHT
There is a major difference between the way in which courts approach interest on damages for injured and bereaved claimants awaiting trial or settlement and the approach we see taken here. The interest rates on personal injury damages are fairly derisory. The courts have refused to allow interest to be paid on costs in personal injury cases. However, as we see here, once a claimant has to repay damages everything is considered on a “commercial” loss basis.
THE CASE
JD Wetherspoon Plc v Stephenus Bernadus Burger & Anor (Consequential matters) [2025] EWHC 1289 (KB)
THE FACTS
The defendant had been successful on appeal against a finding that they were vicariously liable for the acts of door staff. The claimant was, therefore, liable to repay the damages and costs that had been paid.
THE JUDGMENT ON THE APPROPRIATE INTEREST RATE
6. The parties disagree on the appropriate rate of interest. JDW requests interest on monies paid in 2023 at the judgment rate of 8% per annum, or no less than 6% per annum. JDW refers to Section 17 of the Judgments Act 1838 for judgment sums and Section 35A of the Senior Courts Act 1981 which confers a broad discretion on the court regarding interest rates. It is argued that the repayment of monies paid under an order which is set aside is akin to a judgment debt, and the normal judgment rate is 8%. It is also submitted by analogy that where interest is awarded for a period before judgment, the rate is at large and often a commercial rate. JDW observes that base rates have been between 5% and 5.25% during the relevant period.
7. Conversely, Mr Burger contends that a rate of 1% per annum is appropriate. He refers to Multiplex Construction Ltd v Cleveland Bridge Ltd EWCA Civ 133, in which, he says, the rate was 1% above base rate in a commercial case. He argues that 8% is excessive given this is a personal injury claim, not a commercial transaction. His proposed draft order includes interest calculated at 1%.
8. In Multiplex Construction Ltd v Cleveland Bridge Ltd [2008] EWCA Civ 133; 118 Con. L.R. 16, CA, the Court of Appeal considered the return of an interim payment of costs following a successful appeal. While the primary issue was whether interest was payable at all, the court ultimately ordered the repayment of the interim payment “at base rate plus 1% from the date on which it was paid… until the date when it is repaid”. Lord Justice May noted that he would personally find it surprising if the court did not have power to award interest “in a commercial situation such as this, where a relatively large sum of money has changed hands pursuant to an order of the court and where, in effect, the court is ordering it to be repaid”.
9. While this case arises from a personal injury claim, the repayment concerns monies paid under a court order which has now been set aside. The principle is that the party who received the money has had the benefit of it. As JDW submits, there is a danger that if the date of payment is delayed and the interest rate is too low, Mr Burger could achieve a better return by retaining and investing the money. I can see no basis for ordering a rate which is below what could realistically be obtained if the money had been invested during the period it has been held. A rate reflecting commercial reality is appropriate.
10. Multiplex Construction provides a clear precedent for applying base rate plus 1% in similar circumstances concerning the return of monies paid under a court order that was later reversed. Given the prevailing base rates during the period the money has been held by Mr Burger or his solicitors, this rate provides a fair reflection of a commercial return. JDW’s alternative submission of no less than 6% is also consistent with this approach and, I consider, easier to apply where rates have fluctuated.
11. Accordingly, I conclude that the appropriate rate of interest is 6% per annum. That rate should apply from the date the monies were paid by JDW, being 10 October 2023 or such other date on which any particular tranche of money was paid, until the date of repayment.